Timber company Gunns plans to buy ITC Timber - a Tasmanian and Victorian subsidiary of Elders - for $100 million.

Elders announced the sale on Monday and a sale agreement is expected to be in place by mid-October.

ITC management briefed the 194 employees at the Heyfield timber processing plant about the changes earlier this week.

ITC Timber has timber mills in Heyfield, in Alexandra in Victoria's south-west and two in Tasmania.

ITC Limited spokesman Adam Redman said the company had insisted on job security for the timber mill workers as part of the conditions of sale.

"For ITCs part we made sure the sale agreement includes a commitment to protect the terms and conditions of employment for ITC Timber employees,'' he said.

"All the staff have been briefed and they will be kept fully informed and supported throughout the whole process.

"It's sad to see colleagues leave for another company but we have made sure employment conditions are secure.''

Mr Redman also said ITC timber was the only division Elders was selling to Gunns.

"ITCs other divisions, Forestry and Funds Management, remain with Elders and are not being sold,'' he said.

A spokesman for Gunns said they hadn't announced their business plans for the factory but said they would talk to the workers about their future plans once the ownership change was completed.

The spokesman was unable to confirm whether jobs would increase or decrease at the factory.

But he said the acquisition significantly increased the scale of Gunns' timber processing operations and they had bought ITC Timber because it was a successful enterprise.

A statement from Gunns posted on the Australian Stock Exchange states "the acquisition represents a logical combination of two complementary businesses and is expected to deliver significant, realisable synergies by the end of year one''.